Threat to water policy if used for 'political gain'

THE TEMPTATION to use water charges as a “political football” could destroy the development of water services in Ireland, a leading European water economist has said.

The establishment of a fair and cost-effective water-pricing system in Ireland was under threat from those who wanted to link water charges to the upcoming fiscal treaty in order to secure a No vote, David Zetland, a senior water economist at Wageningen University in the Netherlands, said.

However, he said there was also a danger that those supporting the introduction of charges would come under political pressure to keep prices artificially low.

“The danger is in allowing politicians to get involved in water policy at all. Using water for political gain is not a good way to run the system.”

In Brussels at Green Week 2012, the EU’s main annual environmental conference, Mr Zetland said there was “no excuse” to not charge the full cost of water in any European country.

“Anyone who says they cannot afford to pay for water in Europe is not necessarily telling the truth.” Europe’s poor were not facing water poverty. For people to be in water poverty, charges needed to exceed 3 per cent of income and that was not the case in any EU or OECD country where charges were in place, he said.

All users should pay the same for water, he said, as social tariffs had been shown not to target the people who most needed them. “If you want to take care of poor people, give them money,” he said.

Once water utilities or regulators determined the price of water, it should then be up to the consumer to decide how much they use.

The costs of water must be transparent and understood by policymakers and the public if water charges were to work, John Maguire of water industry consultant Solventa told the conference.

It was essential that the price of water reflected its actual costs as both undercharging and overcharging caused problems, he said.

The imposition of water charges must not be used as a revenue-raising exercise or a way of penalising consumers for use.

“Water charges should not be used as a tax. If you are taxing water you are causing market distortion.”

While undercharging could result in a lack of infrastructure investment, he added, overcharging resulted in people using so little water that the producers were starved of revenue and the consumer ended up paying more for less.

The “sustainable leakage level” in any country or region also needed to be determined, Mr Maguire said, rather than attempting to eliminate leaks completely.

“You reach the point in reducing leakage where it doesn’t pay to reduce any further and it may be cheaper to build a new reservoir,” Mr Maguire said.

Consumers needed to realise they were paying for the service of producing and delivering clean drinking water, not for the water itself, Jaroslav Mysiak of the Euro-Mediterranean Center for Climate Change said.

Once a price scheme was introduced which ensured the reliability and sustainability of the service, attention could be turned to using pricing in order to induce conservation, he added.

Beate Werner of the European Environment Agency said countries could not be economically sustainable if they were not sustainable in their water management.

Revenue from water metering was necessary to maintain infrastructure, but the incentive of price also needed to be used to encourage sustainable use, she said.